Re: Why Peter Rs Fee Market Wont Work

To me, it seems anything but negligible, and seems like common sense.
The bigger block, the longer the time is required to process
it, and the greater the the risk of orphaning.
What am I missing here?

All the of expensive operations can be done before a block is found, then they do not add any proportional time.

Correct.

Miners could agree to only solve blocks that the other miners are already expecting. This would mean that exactly zero information about the block contents would need to be transmitted at the time of block-solution announcement. This would eliminate any block-size dependent propagation risk.

1. By expensive operations, I assume you mean the validation of transactions.
The validation of transactions could be done by the miner solving the block, before a block is found, but the propagation of a large block across the network is another story.
Assuming a 1 MB/second speed, this seems like it would certainly become a factor when blocks get large, say 100 MB. 100 seconds
is surely significant (a factor of 16.6~% on a 600 second block interval).

2. Nodes validating the new block need to make sure they have all the transactions in the block and then compute the merkle tree (not sure how operationally expensive that is).
So are you sure "all" of the expensive operations can be done. Seems like this would contribute to delay and orphaning.

P.S. no hostility personally to gmax despite my opinions about the blocksize debate.

A lot of things are possible.

Block-size dependent propagation delays can be completely eliminated if all of the miners know with some certainty what the next block could be before it arrives. In particular, if miners know that the next block will be 1 of N possible blocks, and if N does not depend on the block size, then communicating which of the N expected blocks is the "real" block requires only log₂N bits (plus of course communicating the PoW).

It is even possible to make N one. Imagine that the miners mine a "practice blockchain" first and that the "real blockchain" next such that the blocks in the real blockchain lag those in the practice blockchain by, for example, one hour. All miners agree to make the real chain an exact copy of the practice chain. Voila: the "real blocks" can be communicated by just transmitting the block headers.

Assuming those possibilities, what would be the implication about the fee market?
Wouldn't this support Daniel's point that a fee market would not develop?

Right. If miners all agreed to behave in this way (e.g., pre-consensus by mining a practice chain first), then the fee market based on orphaning risk would break down. It would be equivalent to the propagation impedance in my fee-market paper falling to zero.